If you want to learn about data, Chris O’Hara is the right person to ask. O’Hara, who leads global product marketing for Salesforce Marketing Cloud’s suite of data and audience products, is a big believer in the data revolution—but first, marketers need to take stock of what data they actually have.

“Some marketers think they have way more data than they actually have, and others think they don’t have a lot of data but actually do,” O’Hara said.

Before joining Salesforce, O’Hara was at Krux, the data management platform that Salesforce acquired in 2016, working on data marketing. In October, O’Hara, along with Krux alums Tom Chavez and Vivek Vaidya, released a book, “Data Driven,” which dives into how marketers should think about using data to overhaul customer engagement and experience.

Before the book’s release, Adweek talked with O’Hara about the book and about how marketers can leverage the data they have while keeping data privacy and consumer trust in mind. A portion of that conversation, which has been edited and condensed for clarity, is below.

Adweek: A lot of marketers have talked about the importance of getting better at explaining to consumers what exactly is being collected and how exactly data is being used. Do you think it’s the responsibility of tech and advertising companies to explain that to the public?

Chris O’Hara: Marketing is better when you have the permission of consumers. Consumers are entitled to know exactly how their data is being used, and consumers are absolutely entitled to have control over their own data. As you talk about the opportunities to get more personalized with customers, you’re allowed to deliver great personalization if the customer has opted in for you to do that on their behalf. If you do that without their consent, it feels creepy and wrong, right? It’s common sense. We’re always going to lead with the idea that trust comes first and that marketing is better with consent. Period.

You write in your book that the biggest risks of harnessing data are centered around privacy, security and trust. As concerns about data privacy grow, and as data breaches continue to occur, how does the industry best rebuild trust with the public? Where does the industry start with reestablishing trust and maintaining trust with consumers?

It’s all based on permission and an opted-in consumer. I like getting advertising messages that are relevant. When I am shopping for a car and I give Cars.com permission to introduce me to new models and send me an email every week, I appreciate it because I’ve asked for it. When I engage with certain sites on the web, like The Wall Street Journal, where I pay for content, I trust them with a certain amount of my data so they can make my reading experience better. That’s the way it should have been, always. Unfortunately, there are some companies in the space that have taken advantage of little oversight to do otherwise. But what we’ve seen in the market is that companies that are not leading with trust are not being valued as highly or perceived as more valuable than companies that do put trust at the center of their relationship with customers.

What’s the biggest misconception marketers have with data?

Something we write about in the book is that some marketers think they have way more data than they actually have, and others think they don’t have a lot of data but actually do. One of Pandora’s svps, Dave Smith, came to us and said, ‘I have one of the biggest mobile data assets in the world. Everyone who uses Pandora is logged in, so we know so much about our customers: what kind of cellphone they have, what kind of music they like, perhaps the ages of the kids in their home, when they listen.’ That’s a lot of data. Pandora probably has one of the largest data assets in the entire world. But Pandora doesn’t know when people are going to buy a car or people’s incomes, necessarily. They don’t know when you’re planning on taking a family vacation. So they turned to second- and third-party data to enrich their understanding of consumers.

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It’s been a long time since publishers have truly been in control of their inventory, but new trends in procurement methodologies and technology are steadily giving premium publishers the upper hand.

The story of display inventory procurement started with the Publisher Direct Era, when publishers were firmly in control of their banners, and kept them safely hidden behind sales forces and rate cards. Then the Network Era crept in, and smart companies like Tacoda took all the unwanted banners and categorized them. Advertisers liked to buy based on behavior, and publishers liked the extra check at the end of the month for hard-to-sell inventory.

That was no fun for the demand side though. They started the Programmatic Era, building trading desks, and leveraging DSPs to make sure they were the ones scraping a few percentage points from media deals. Why let networks have all of the arbitrage fun? The poor publisher was left to try and fight back with SSPs and more technology to battle the technology that was disintermediating them, kind of like a robot fight on the Science Channel.

But all of the sudden, publishers realized how silly it was to let someone else determine the value of their inventory, and launched the DMP Era. They ingested first-party data from their registration and page activity and created real “auto intenders” and “cereal moms” and wonderful segments that they could use to effectively sell to marketers. Now, every smart publisher knows more about their inventory than 3rd parties, and they can also find their readers across the wider Web through exchanges. A win-win!

Then all of the marketers in the world started reading AdExchanger, and saw the publisher example, and thought, “Wow, good call!” They started to truly understand how much money Programmatic companies were taking out of the investment they earmarked for media (silly marketers, Y U no read Kawaja’s first IAB deck?), and decided to use their own technology and data to power audience targeting. If it were a baseball game, this DMP Era for Marketers would be in the first or second inning, but the pitcher is throwing at a fast pace.

The next thing that happened was the Programmatic Direct Era, which lasted about ten minutes and effectively jumped the shark when Rubicon bought two of the more prominent companies involved (ShinyAds and iSocket). Programmatic Direct marketplaces promised a flip of the yield curve for publishers to expose the “fat middle” of undervalued impressions. They attempted this by placing blocks of inventory in a marketplace, and enabled the publisher to set rates, impression levels, and provide API access directly into their ad server. Alas, a tweak to Google’s API did not an industry make. Marketers loved the idea, but since they use audience as the primary mechanism to value inventory, PD marketplaces failed as stand-alone entities and were gobbled up. Under the steady hand of RTB-based technologies, they slowly evolve based on buy-side methodologies. Again, the demand side foils a perfectly reasonable, publisher-derived procurement scheme!

So, what’s next?

The Programmatic Direct Era still lives, albeit within private marketplaces (PMPs) and Direct Deal functionality. The IAB’s Open Direct protocol remains stuck at 1.0, but there is hope—and this time it’s a change that is positive for both marketers and publishers. The latest Era in inventory procurement is what I call Total Automation. Let me explain.

Say a big auto manufacturer has a DMP and has identified, via purchase information, the exact profile of everyone who buys their minivan. Call then “Van Moms.” Then suppose the publisher, who licenses an instance of the same DMP, is a women-friendly publication chock full of those Van Moms—and women who just happen to look like Van Moms. It’s pretty easy to pipe those Moms from the marketer right to the publisher. That process, which you might call Programmatic Direct 2.0, is interesting.

It requires no exchanges, no 3rd party data, no DSPs, no “private marketplace” no SSP, and potentially no agencies (spare the thought!). All it requires is some technology to map users and port them directly into an ad server.

What I just described is happening today, and moving quickly. Marketers are discovering that the change from demo-based buying to purchase-based buying through 1st party data is winning them more customers. Publishers are asking for—and commanding—high CPMs, and those CPMs are backing out for marketers. Thanks to all the crap in open exchanges, paying more for quality premium, “well lit” inventory actually works better than slogging through exchanges trying to find the audience needle in a haystack full of robots and “natural born clickers.”

The new Era of Total Automation will start putting publishers back on the map—but not all of them. The big distinction between the winners and losers will not only be the quality of their audience but, more importantly, the first-party data used to derive that audience. Not long ago, it was easy to apply a layer of 3rd party data and call someone an “auto intender” if they brushed past an article on the latest BMW. But compare that to the quality of an “auto intender” on a car site that has looked at 5 sedans over the last 2 weeks, and also used a loan calculator. There’s no comparison. The latter “intender,” collected from page- and user-level attributes directly by the publisher is 10 times more valuable (or $30 CPM rather than $3, if you like). The reason? That user volunteered real, deterministic information about herself that the publisher can validate. I am willing to bet that an auto manufacturer would pay a high CPM for access to an identified basket of those intenders on an ongoing, “always on” basis.

This is fantastic news for publishers that have great, quality inventory and have implemented a first-party data strategy. It’s even better news for the marketers that have embraced data management, and can extract and find their perfect audience on those sites. The Era of Total Automation will be over when every single marketer has a DMP. At that time, we will discover that there is no longer a glut of display inventory—all of the quality “Van Moms” and “Business Travelers” and the like will be completely spoken for. What will be left is a large pile of unreliable, long tail inventory available for the brave DR marketer and his DSP.

I think both marketers and publishers should welcome this new Era of data-driven one-to-one marketing. The crazy thing is that, once we get it right, it looks just like an anonymized version of direct mail—perhaps the oldest, greatest, most effective and measurable marketing tactic ever invented!

Clayton Christensen, the father of “disruptive innovation,” would love the ad technology industry.

With more than 2,500 Lumascape companies across various verticals chasing an exit, venture funding drying up for companies that haven’t made an aggressive SAAS revenue case and the rapid convergence of marketing and ad technology, the next few years will see some dramatic shifts.

The coming tsunami of powerful megatrends is driving ad technology relentlessly forward at a time when data is king and the companies that best package and integrate it into multichannel inventory procurement will be the rulers.

In a world where scale matters most, the big are getter bigger and smaller players are getting forced out, which is not necessarily good for innovation.

Data: Powering The Next Decade Of Ad Tech

Data, especially as it relates to “people data,” is and will be the dominant theme for ad technology going forward.

Monolithic companies with access to a people-based identity graph are leaning in heavily to identity management, trying to own the phone book of the connected device era. Facebook’s connection to Atlas leverages powerful and deeply personal deterministic data, continually volunteered on a daily basis by its users, to drive targeting. Google is attaching its massive PII data set garnered through Gmail, search and other platforms to its execution platforms with its new DMP, DoubleClick Audience Manager.

Both platforms prefer to keep information on audience reach safely within their domains, leaving marketers wondering how smart it really to tie the keys of user identity in a “walled garden” with media execution.

Will large marketers embrace these platforms for their consumer identity management needs, or will they continue to leverage them for media and keep their data eggs in another basket?

While some run into the arms of powerful cloud solutions that combine data management with media execution, many are choosing to take a “church and state” approach to data and media, keeping them separate. Marketers have to decide whether the risk of tying first-party data together with someone’s media business is worth having an all-in-one approach.

Agencies Must Adapt Or Die As Consultancies Edge Into Programmatic

Media agencies have also been challenged to provide more transparency around the way they procure inventory, the various incentive schemes they have with publishers and their overall methodology for finding audiences. With cross-device proliferation, agencies must be able to identify users to achieve one-to-one marketing programs, and they need novel ways to reach those users at scale.

That means a commitment to automation, albeit one that may come at the expense of revenue models derived through percentage of spend and arbitrage. Agencies will need new ways to add value in a world where demand-side players are finding closer connections to the supply side.

As media margins collapse, agencies need to act as data-driven marketing consultants to lift margins and stay relevant. They face increasing competition from large consultancies whose bread and butter has been technology integration. It’s a tough spot but opportunities abound for smart agencies that can differentiate themselves.

Zombie Companies Die Off But Edge-Case Innovation Continues

We’ve been talking about “zombie ad tech” for years now, but we are finally starting to see the end of the road for many point solution companies that have yet to be integrated into larger mar tech “stacks.”

Data-management platforms with native tag-management capabilities are displacing standalone tag-management companies. Retargeting is a tactic, not a standalone business, which is now a status quo part of many execution platforms. Fraud detection systems are slowly being dragged into existing platforms as add-on functionality. Individual data providers are being sucked into distribution platforms and data exchanges that offer customer exposure at scale. The list goes on and on.

This is an incredibly positive thing for marketers and publishers, but it is also a challenge. Cutting-edge technologies that give a competitive advantage are rarely so advantageous after they’ve moved into a larger “cloud.” Smart tech buyers must strike a balance between finding the next shiny objects that confer differentiating value, while building a stable “stack” that can scale as they grow.

That said, the big marketing technology “clouds” offered by Adobe, Oracle and Salesforce continue to grow, as they gobble up interesting pieces of the digital marketing “stack.”

Will marketers go all-in on someone’s cloud, build their own “cloud” or leverage services offerings that bring a unified capability together through outsourcing?

Right now, the jury is out, mostly because licensing your own cloud takes more than just money, but also the right personnel and company resources to make it work. Yet, marketers are starting to understand that the capability to build automated efficiency is no longer just a function of marketing, but a way to leverage people data to drive value across the entire company.

I think the most exciting things happening in ad technology are happening in inventory procurement.

Programmatic direct technologies are evolving, adding real audience enablement. Version 1.0 of programmatic direct was the ability to access a futures marketplace of premium blocks of inventory. Most buyers, used to transacting on audience, not inventory, rejected the idea.

Version 2.0 brings an audience layer to premium, well-lit inventory, while changing the procurement methodology. I think most private marketplaces within ad exchanges are placeholders for a while, as big marketers and publishers start connecting real people data pipes together and start to buy directly. It’s happening now – quickly.

I also can see really innovative companies leaning into creating a whole new API-driven way of media planning and buying across channels that makes sense. In the near future, the future-driven approaches of companies like MassExchange will bring to cross-channel inventory procurement a methodology that is more regulated, transparent and reminiscent of financial markets. It’s a fun space to watch.

Who will begin adding algorithmic, data-science driven automation and proficiency to the planning process, not just execution and optimization in the programmatic space?

Many of those in the ad technology and media game are here for the challenge, the rapid pace of innovation and the opportunity to change the status quo. We are all getting way more than we imagined lately, in a fun, exciting and fast-moving environment that punishes failure harshly, but rewards true market innovation. Stay safe out there.

In ad technology, we have spent 20 years building up the ‘pipes’ to create real-time ad delivery and measurement, but it has mostly been used to drive ecommerce. Yet, big consumer brands such as Kraft and Kellogg’s have started to figure out that you can use the technology to drive upper-funnel consumer engagement. The paper is an attempt to understand how real this trend is, and where it will go in the short term.

Where will it go? Are all brands going to start doing equity advertising online?

Well, they should if they have the tools to do it. First of all, consumers have been shifting their attention away from ‘reach’ channels like print, radio, and TV for a long time. Marketers need to follow them to their mobile phones, desktops, and tablets, but doing so at scale has been costly and complex. Early adopters are companies that have created measurement frameworks to understand the impact of their equity advertising across all channels – a difficult but necessary competency for undertaking programmatic branding.

Can brands get enough reach programmatically?

Of course they can, but I think you have to distinguish between ‘reach’ and ‘quality reach’. People see enough banner ads every day, so inventory and eyeballs are not the problem. Television doesn’t just work because it can scale massively (e.g. Superbowl ads). It also works because video is an amazing medium for storytelling, which is what equity advertising is all about. Just because you can reach 75% of the population or more with digital, doesn’t mean you can succeed at programmatic branding. Stitching the right messages together in their various formats is a big challenge – especially with the dearth of quality video ad inventory.

How do you know it works?

Again, this is a problem that requires an entirely new framework to address. If you want to measure the sales lift from a branding exercise, we know it is possible to match online audiences exposed to advertising and offline purchase behavior. This is why Datalogix sold to Oracle at a reportedly healthy valuation. The harder challenge is mapping an individual user across her devices, or ‘cross device identity management’ (CDIM). That capability makes measurement more granular, enables sequential messaging, and ultimately unlocks user identity. Without that capability, available through data management, attribution remains a guessing game.

What do you see as the benefits of running programmatic brand advertising campaigns?

What innings is it for programmatic branding?

The consensus of our panel was that it’s early innings – maybe first or second. Early adopters are starting to see the advantage of shifting expensive television budgets to digital. After all, television viewership is more fragmented than ever, and it’s challenging to put together an affordable reach package in traditional media. Online advertising, secured through ad exchanges, is undervalued and provides great reach. It will be hard for big ad spenders to avoid the kind of ‘reach hacking’ you can apply in biddable online media. The game is going to be played at a very fast pace, and early adopters will continue to receive competitive advantage from developing programmatic competencies first.

Any final thoughts?

If branding is largely creating good feelings and associations with a product or company, then I think digital is in a great place. People want individualized experiences online. They like it when they are recognized as an existing customer, they like discounts based on membership with a brand, and they like messaging that’s relevant. They dislike being re-targeted with ads for something they have already bought, and they don’t like too see ads for completely irrelevant products. Putting the right targeting and measurement (hallmarks of direct response) together with great stories and creative (the hallmarks of branding) is the proverbial peanut butter and chocolate. The companies that can use programmatic ad technology to create impactful equity campaigns will win big in 2015 and beyond.

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Programmatic advertising, once a threat, is now considered an opportunity

11 May 2015 · By Western iMedia

The varied facets of programmatic advertising have become more mainstream in the media industry. Those heavily involved at their media companies see a promising future for this once niche revenue opportunity.

“Efficiency is the name of the game,” said Matt Prohaska, CEO and principal of Prohaska Consulting, speaking about programmatic buying at the World Congress in New York City on Monday. Prohaska turned the discussion over to a panel of experts that explored the future of programmatic.

There are two major aspects of programmatic advertising, said Jeremy Crandall, senior vice president of operations and client services at Adroit Digital. Automated programmatic, which includes real-time bidding (RTB), is the side heard more often.

“To me, programmatic is like a BLT sandwich,” she said. “RTB is the bacon.”

The other aspect is data-driven programmatic, in which buyers leverage data to make informed decisions about which ad impressions to buy.

Crandall explained the different modes of programmatic buying and selling. Open RTB leverages ads not sold by a direct salesperson. These ads are are remnant impressions and the transactions take less than 100 milliseconds.

“It really is a many-to-many marketplace,” she said.

Crandall described private marketplace (PMP) transactions as a walled garden, in which select buyers are invited to participate and usually involves price floors. PMP is not as impersonal as RTB, Crandall said. Sharing data makes a significant difference in efficacy of the buy.

“It is really those relationships that still matter a lot,” she said.

Chris O’Hara, vice president of strategic accounts at Krux Digital, gave insight from the data management platform (DMP) side of the programmatic equation.

O’Hara outlined the evolution of publisher ad sales as moving from publisher direct, to ad network 1.0, to the introduction of the DSP era. We are currently in the DMP area, one of “programmatic direct,” O’Hara said.

We are moving toward an era of total automation across channels. Efficient automation, where publishers retain more revenue and advertisers get increased reach for budget, is part of that future.

“This is the wave of the future; it’s happening and it’s super exciting,” O’Hara said.

Jon Usry, director of digital platforms at Dallas Morning News Media, shared his company’s strategic approach to the current and future states of programmatic.

When programmatic first entered the market, the reaction from publishers was one of fear, as buyers were perceived to have the advantage and the quality of these ads seemed low.

This is not the case now, Ursy said. Programmatic is seen as an opportunity rather than a threat.

“Certainly, a lot of things have changed significantly,” he said.

Dallas Morning News made the strategic decision to build or purchase digital marketing solutions as programmatic grew in influence.

The current state of programmatic is a level playing field, Ursy said. The company hold regular meetings about how to leverage programmatic. They explore all options, he said: “There might be certain situations where we want programmatic to be competing with direct sells.”

Developing a strong plan for programmatic is important to the company. Programmatic media spend is set to double in the U.S. alone, Ursy said.

Usry shared where The Dallas Morning News is focusing as they develop their future programmatic strategy:

Establishing programmatic as a core competency.

Selecting the right technology partners.

Embracing a culture of testing and learn.

Hiring the right talent.

As data continues to grow and marketers get better tools, Usry says programmatic has a positive future: “For the future of programmatic, I think it looks promising for all parties.”

I was recently at a Digital Marketing Association awards dinner where data legend Charles Stryker was being honored. After accepting his award, he told a famous story about data that every digital marketer should know.

A long time ago, the US Postal Service discovered they were paying a ton of money to deliver mail to deceased people. Charles was hired to help them get a handle on their records and create a sort of “Do Not Mail” list. Part of doing the work involved considerable A/B testing to ensure he was making the correct assumptions about the data. Direct response mailers were being sent to groups of dead people and similar groups of folks who were still alive. Something astonishing happened when the results came in.

The dead people responded at nearly twice the rate of the living.

Of course everyone at the dinner (about a hundred senior direct marketing executives) laughed uproariously. They have seen all kinds of unpredictable results with direct marketing. In today’s digital age, marketing is moving faster than ever. The velocity of data is increasing in orders of magnitude, and attribution is going to get even trickier.

What happened with the “dead” people was pretty interesting. It turns out that the successful mailers went to households where the husband of the family died, and the elderly spouses were taking great care to go through and read the mail of their deceased partners. The wives wanted to make sure there was nothing important in those letters—and probably were connecting with their husbands through that simple, daily task. Those widows made a great mailing list “select” since they actually opened and read the mail!

In today’s digital marketing, where we seem increasingly dependent on algorithms and attribution models for targeting and measurement, I wonder if we are too deep in the weeds. Are we forgetting the real, human element of marketing? Do we really understand how success and failure happen with our campaigns? At a recent iMedia agency conference, a lot of the talk was about trying not to forget that advertising is first and foremost about storytelling. Leading with emotion is so important. The marketer has to make an emotional connection with his audience and get them to care.

That struck me when watching a joint town hall workshop with Google and Kellogg’s about dynamic creative. Yes, changing the background color or “call to action” on a 300×250 ad in real time can bump the lift of a campaign incrementally—but are we tweaking a broken process?

Can we really tell great stories on standardized banner ads?

With the rapid rise of programmatic, a lot of platforms and data companies are fully committed to a standardized industry where scale is king. Display, video, and mobile—biddable and accessible at full scale—is the mandate. Kellogg’s wants inexpensive access to a large electronic palette where Frosted Flakes ads can be constantly tweaked to get optimal performance. Nothing wrong with that. American Express recently announced an “100%“programmatic” initiative for digital marketing. Why not? Both companies spend tons of money on TV, and optimizing the bottom of the funnel makes complete and utter sense.

But that’s all we are talking about: Optimizing the bottom of the funnel with standardized ads. Sorry, but we are not creating new customers with dynamic 300×250 ads that get a .05% click-through rate. If you are in this business, working for a venture backed startup or newly public adtech company whose value proposition is around driving audience targeting at scale, then you are not “creating stories” online.

As an industry, we need to create digital campaigns that get people to “open the mail.” This is incredibly hard to do with standard display banners, today’s woeful “native” executions, and interruptive social ads. Video has promise, but scale still eludes marketers, and low video completion rates erode available reach considerably.

So, how do you leverage programmatic technology to get great creative out at scale? The only real answer is to automate the workflow behind securing premium inventory and custom programs. That’s where the promise of programmatic direct comes in. Marketers want great ideas from publishers, access to the best inventory they have, and non-standardized units. They just don’t want to pay 10% of their media budgets for planners to cut and paste data into spreadsheets.

Innovation in the space is not just limited to programmatic direct companies with API connections into the publisher side (iSocket, ShinyAds, AdSlot) and workflow automation players (Centro, MediaOcean, and Bionic Advertising)—but also includes RTB players like Rubicon and MediaMath who are building new automation capabilities to augment their RTB stacks. In other words, it’s all about automating the deal right now.

Do they want access to evergreen programmatic campaigns that drive their most likely customers through the bottom of the sales funnel? Of course, and that’s a great job for programmatic RTB. But it does not, cannot, and will never replace the kind of media you can secure through a guaranteed transaction. Also, speaking of dead people responding better—that kind of sounds familiar. In programmatic RTB, some of the best click-through rates come from the dead—fake visitors created by robots.

That said, I think more and more digital advertising will go programmatic, and that programmatic RTB will command the lion’s share of performance budgets. But, when it comes to building brands, bringing automation to the process of securing quality inventory will win.